Profits at Debenhams plunge 84 per cent

Lloyd Doyle
April 19, 2018

But analysts were still left in shock this morning when the firm revealed the bottom line was that pre-tax profits had fallen 84 per cent from £87.8 million to £13.5 million.

Excluding these extra costs, underlying profit before tax was £42.2m, down 51.9%.

Debenhams also blamed a "disappointing Christmas season" for increasing competitor discounting and ultimately hitting underlying earnings for the United Kingdom, which fell 39.3% over the half-year.

The department store chain said like-for-like sales fell by 2.2% in the 26 weeks to 3 March, with the cold weather blamed, experienced in late February, for about half that decline.

It is now forecasting full-year pre-tax profits at the lower end of the current range of forecasts of between £50 million to £61 million.

The poor first half came in a United Kingdom market that was challenged by volatile consumer spending and disrupted by extreme weather conditions, including...

He added: "We are holding share in a hard fashion market, and, in other categories such as furniture, exciting new partnerships have the potential to transform our offer".

'We approach the remainder of the year mindful of the very challenging market conditions, but with confidence that we have a strong team and the right plan to navigate them and return Debenhams to profitable growth'.

The small cap retailer, which issued a profit warning back in January, also said Matt Smith, its chief financial officer, was quitting the group to become finance chief of rival Selfridges.

The struggling retailer is one year into a turnaround programme led by chief executive Sergio Bucher, with the former Amazon and Inditex executive closing some stores and revamping the rest, cutting promotions and improving its online service.

It was previously guiding to 55-65 million pounds and made 95.2 million pounds in 2016-17.

Debenhams shares were down 2.1 pence at 21.2 pence at 0732 GMT, valuing the business at 262 million pounds - some 20 times less than ASOS, the 18-year-old online fashion retailer. The pre-tax figure includes an exceptional charge of £28.7m relating to the cost of a strategic review and restructuring the company's warehouse and logistics operation.

Other reports by Iphone Fresh

Discuss This Article